Correlation Between China Railway and Dongguan Aohai
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By analyzing existing cross correlation between China Railway Group and Dongguan Aohai Technology, you can compare the effects of market volatilities on China Railway and Dongguan Aohai and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Railway with a short position of Dongguan Aohai. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Dongguan Aohai.
Diversification Opportunities for China Railway and Dongguan Aohai
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Dongguan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Dongguan Aohai Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongguan Aohai Technology and China Railway is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Railway Group are associated (or correlated) with Dongguan Aohai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongguan Aohai Technology has no effect on the direction of China Railway i.e., China Railway and Dongguan Aohai go up and down completely randomly.
Pair Corralation between China Railway and Dongguan Aohai
Assuming the 90 days trading horizon China Railway Group is expected to under-perform the Dongguan Aohai. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Group is 2.58 times less risky than Dongguan Aohai. The stock trades about -0.4 of its potential returns per unit of risk. The Dongguan Aohai Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,007 in Dongguan Aohai Technology on October 25, 2024 and sell it today you would earn a total of 15.00 from holding Dongguan Aohai Technology or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Railway Group vs. Dongguan Aohai Technology
Performance |
| Timeline |
| China Railway Group |
| Dongguan Aohai Technology |
China Railway and Dongguan Aohai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Dongguan Aohai
The main advantage of trading using opposite China Railway and Dongguan Aohai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Dongguan Aohai can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dongguan Aohai will offset losses from the drop in Dongguan Aohai's long position.| China Railway vs. State Grid InformationCommunication | China Railway vs. Digital China Information | China Railway vs. Olympic Circuit Technology | China Railway vs. Sublime China Information |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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